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Russian Demand For Consumer Credit, Mortgages Jumps As Ruble Weakens, COVID-19 Spreads

A woman leaves an exchange office in Moscow on March 20.

Russians have been applying for consumer credit and mortgages in greater numbers due to fears that prices and rates will soon increase, the business daily RBC reported.

Russians have historically rushed to purchase foreign consumer goods, such as electronics and cars, as well as apartments during periods of economic volatility and ruble depreciation.

The Russian ruble has fallen nearly 20 percent over the past month after oil prices collapsed March 9 following a disagreement between Moscow and Riyadh on production cuts. A weaker ruble will make popular imported products like iPhones more expensive.

The recent ruble fall has encouraged citizens “not to delay the purchase of goods they need” and buy them up now before prices rise, Irina Nosova, director of Moscow-based rating agency ACRA, told RBC.

Russians scooped up household appliances and cars at the end of 2014 and the beginning of 2015 when oil prices last nosedived, causing a sharp currency devaluation, and citizens probably “fear missing the moment” now, she said.

Fear over the impact the coronavirus could have on the economy and supply chain has also played a role in credit demand as Russians -- just like their European and American counterparts -- stock up on food and other goods.

Otkritie Bank told RBC that demand for cash credit rose 15 percent last week compared with the year-earlier period while Sberbank, the nation’s largest bank, said it has witnessed an increase in the cash size of the requests by about 10 percent over the past month.

VTB, the nation’s second-largest bank, told RBC that the number of applications for cash credit rose by one-third in March after it had cut its rates to 7.5 percent. VTB said mortgage applications rose 15 percent last week while auto credit rose at a similar pace.

Based on reporting by RBC

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